An Estimate for the Advancement: RP’s National Budget for 2011

     “We will protect the welfare of our people and look after the interest of the majority” as our President Benigno Simeon Aquino III said in his State of the Nation Address (SONA).

     From his SONA, our President considered dubbing the 2011 National Budget as “Reform Budget” because it is his quest for genuine change in spending and allocation policies. It also reflects his commitment to lift the nation from poverty through honest and effective governance. "The call of our times is for reform: to make this possible, we are submitting a budget and corresponding resources to the programs and policies that make real the changes we need to revitalize our economy, while leaving no sector behind."

      For this “Reform Budget” to be possible, President Noynoy has approved a budget of P 1.645 trillion. But where will the government get this big amount of money? 

    Indeed this amount is too big to raise. But if everyone will cooperate, nothing is impossible.

We all know that the government derives its revenues from taxes, which will then be used for different projects. Also, our national budget comes from the taxes they collect. And to raise P 1.645 trillion, our government need not to impose additional taxes on people. What they need to do is to collect taxes efficiently. But with the presence of corruption, these collections are not enough. Based on the estimate of Transparency International, it consumes 20 percent of the country’s budget. These are funds that could have been used to build quality classrooms and hospitals, good roads and bridges, or provide more livelihood programs.

    
       We all knew that only BIR (Bureau of Internal Revenue) and BoC (Bureau of Customs) were the only agencies that contribute to our total revenue. Well, there are other revenue earners that are expected to contribute some P150 billion or about 11% of our revenue target for 2011. This will come from fee-collecting agencies, Bureau of the Treasury and the privatization proceeds.

    




       The 2011 National Budget is meant to benefit the poor and vulnerable Filipinos. The resources will be allocated to address their needs. The government will focus on giving them jobs that will empower them, not just to put food on their table but to provide them with opportunities to rise above poverty.

     
     Consistent with their bias for the poor, the social services sector will be their top priority. It will get a significant portion of the budget, some P560.8 billion or 34.1% of the total.The economic services sector comes next with P361.1 billion, 22.0 percent of the total budget. It is followed by our debt burden, with P372.1 billion (22.6 percent); general public services, with P273.5 billion (16.6 percent); and defense, with P77.5 billion (4.7 percent).

    The ten departments receiving the biggest share of the 2011 budget are the same as in this year’s budget. There are changes, however, in their program composition and ranking.

AGENCY	BUDGET	Percentile
1. DepEd	P207.3 billion (including the Educational Facilities Fund) (18.4% increase from previous year)	12.6%
2. DPWH	P110.6 billion	6.7%
3. DND	P104.7 billion (81.1% increase from previous year)	6.36%
4. DILG	P88.2 billion (increase of 32.6%)	5.36%
5. DA	P41.7 billion (decrease of 8.5%)	2.53%
6. DSWD	P34.3 billion (increase of 122%)	2.08%
7. DOH	P33.3 billion (increase of 13.6%)	2.02%
8. DOTC	P32.3 billion (an increase by 87.8%)	1.96%
9. DAR	P16.7 billion	1.02%
10.DOJ	P14.3 billion	0.87%

        It is not all about the government,  
we,

the civil society

the media

the academe

public servants

and private individuals

also have the responsibility to track government expenditures.

     The government believe that the responsibility to check where the funds go and how these are spent should not be left to the COA alone. We are all tasked with looking after the public welfare, and this includes prudence and accountability in the allocation and spending of public funds.

    Through the reform budget, the government hopes to prioritize the needs of the marginalized segments of our society, to restore the people’s trust in government through good governance and other initiatives, to accelerate growth via public-private partnerships, and to promote a sound environment for future generations – today.

    If the government will be able to implement the “Reform Budget”, allocating the right amount to different sectors and using this budget in a way that that the citizen of the country will benefit especially the vulnerable and the poor, both the citizens of this country and the potential investors will trust in the administration, thus investing their money in our economy. It will provide job opportunities to many citizens enabling them to support their own basic needs. If this continuously happens, our economy will grow and  our GDP and GNP will increase.

   Also if the 10 departments who received the biggest share in the 2011 budget will be able to use the money allocated to them wisely, a huge percentage of the public will benefit. If the government will be able to give jobs to the unemployed, many Filipinos will not suffer from hunger. It is not all about having a job but also about having good education because indeed education is the key to reducing poverty.  If everyone will be able to study, there will be lesser illiterates in the future, our next generation. Every Filipino around the world will be globally competitive.

"Katuwang ang 2011 badyet, sama-sama nating lakbayin ang landas tungo sa paggugol na matuwid!"

                                                              -President Benigno S. Aquino    

SOURCES:

http://www.thepoc.net/breaking-news/breaking-stories/9293-aquino-approves-p1645t-2011-budget.html

http://www.gov.ph/2010/08/24/president-aquinos-2011-budget-message/

http://overacupofcoffee.com/?p=136

  

Rate me! Rate me! So I can borrow money!

     Credit rating agencies are becoming more and more popular nowadays. We hear a lot about them. But do we really recognize their purpose? What makes them so powerful and essential in the economy of a country? Could their absence or presence affect a country’s performance? 

     Some credit rating agencies abroad give credit rating and grant loans to the Philippine government. An example of which is the World Bank. In the Philippines, different banks do that also. Different firms get evaluated and they are given credit ratings. 

     What do we mean by credit rating agency? Credit Rating Agencies worked for so many years on designing a simple and readily understandable system that would allow any investor to invest in international securities with which they were not directly familiar. 

        Firms are given credit ratings based on their financial statements, profit, liquidity, etc. The higher the rating, the more privileges the firm receives. One of the benefits is lower interest rate. 

Roles of Credit Rating Agencies

• Eliminates information asymmetry
• Provides quality assurance to unsophisticated investors about inherently complex financial products
• Increase the efficiency of the markets
• Lessen the cost for both borrowers and lenders
• Determines the interest rate and price ascribed to a particular tranche
• Provides information for regulatory purposes

"The Big Three"

    There are many agencies that assign credit ratings for different types of users like issuers, investors, broker-dealers, investment banks and governments. But there are those who rise above the rest and they are referred to as “The Big Three”. The big three consist of Standard & Poor (S&P), Moody’s and Fitch Group. Standard & Poor and Moody’s are based in the United States while Fitch has two headquarters – New York City and London controlled by the France-based Fimalac SA. The market share of the big three is 95% - Moody’s and Standard & Poor’s have a market share of 40% each and Fitch’s market share was around 14% to 15%.

 

The Philippine Rating Services Corporation

   In the Philippines, there is only one domestic credit rating agency accredited by the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas known as The Philippine Rating Services Corporation (PhilRatings). There are eligibility criteria that PhilRatings should pass before its accreditation like an established rating methodology, a pool of experienced analysts and that the CRA has an established record of independence, objectivity and transparency. Philratings was accredited by SEC after its compliance with the requirements under SRC Rule 12.  It implements a national credit rating system for the betterment of the Philippine capital market. 

       From everything that we have researched and read, we have concluded that these credit rating agencies are of big help to our capital market. Without them, the borrowers will have difficulty borrowing money and they will have to pay high interest due to high interest rates. Without them, lenders will not be certain of the firm where they will lend their money to. They, then, lessen the cost for both the borrowers and lenders. With their presence, too, there is order and organization in the market. There is enough information about the borrowing firm that is available to the lending firm.

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